Lean and stoichiometric DME fueled compression ignition engine concepts were compared to a base heavy-duty diesel engine at the near rated power operating condition. The ability to achieve ultra-low emissions and high thermal efficiency was evaluated using a combined 3D CFD and 1D cycle simulation approach. The peak gross indicated efficiency was achieved using lean DME operation due to improvements in mixing resulting from the DME injection event. Stoichiometric operation resulted in reductions in gross indicated efficiency due to incomplete combustion. System level comparisons showed that, when the impact of NOx after-treatment, air handling, and waste heat recovery are considered, the stoichiometric DME cases show an improvement in efficiency over lean DME and lean diesel combustion. The improvements are the result of reductions in pumping losses, elimination of DEF losses, and recovery of exhaust energy. Well-to-wheels analysis was performed and CO2 emission showed a heavy dependence on fuel feedstock for DME. Finally, extreme downsizing was investigated and it was found that stoichiometric operation provides the potential to decrease the displacement by a factor of two with no degradation in power, similar brake thermal efficiency, and near zero NOx emissions.